Gold & Crude weaken as the Dollar lifts

Nymex Light Crude is testing support at $60/barrel on the long-term rising trendline. Breach would confirm a primary down-trend with a long-term target of $45/barrel.

Nymex WTI Light Crude

Crude and gold tend to rise and fall together. The long-term chart below compares gold and crude prices adjusted for inflation (CPI).

The bear rally in Gold met resistance below $1250. Reversal below support at $1180 would offer a long-term target of $1050/ounce (the 2015 low).

Spot Gold in USD

Low crude prices tend to strengthen the Dollar (scale inverted on the chart below).

The Dollar Index is testing resistance at 97. Breakout is likely and would further weaken demand for Gold.

Dollar Index

Crude reversal undermines Gold rally

Nymex crude broke support at $65, warning of a primary down-trend with a medium-term target of $56/barrel.

Nymex WTI Light Crude

Crude and gold tend to rise and fall together, over the long-term, and falling crude prices warn of gold weakness.

The bear rally in Gold is likely to meet stubborn resistance at $1250. Reversal below support at $1180 would offer a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

Another major influence on Gold prices is Dollar strength. A strong Dollar is synonymous with lower gold prices. The Dollar Index is trending upwards but ran into resistance at 96.50/97.00.

Dollar Index

The reason is not hard to find as China’s central bank (PBOC) stepped in to support the Yuan at 14.5 US cents (6.9 to $1), selling Dollar reserves.

Chinese Yuan

The Aussie Dollar also strengthened as a result.

Australian Dollar

Australian Gold stocks continue to find support because of the weak currency (AUD) but a declining Trend Index warns of long-term weakness. Breach of support at 4500 would signal a primary down-trend.

All Ords Gold Index

Gold rally expected to falter as Dollar strengthens

China’s Yuan continues to weaken while the Dollar index strengthens. Follow-through above 97 would signal another primary advance.

Dollar Index

A strengthening Dollar would weaken demand for Gold. The bear rally is likely to meet stubborn resistance at $1250. Reversal below support at $1180 would warn of a decline to the 2015 low at $1050/ounce.

Spot Gold in USD

The monthly chart of Spot Silver also shows a strong down-trend, testing primary support at $13.50/ounce.

Spot Silver

Crude oil is also showing signs of weakness, with a bearish divergence on the Trend Index. Breach of support at $65/barrel would warn of a primary down-trend.

Nymex Light Crude

In the long-term, gold and oil tend to rise and fall together.

Gold bear rally boosts Aussie miners

China’s Yuan broke support at 14.50, warning of another decline.

Chinese Yuan

A weaker Yuan is likely to lead to Dollar strength. The Dollar Index respected support at 94 and follow-through above 96 would confirm another advance.

Dollar Index

A strengthening Dollar would weaken demand for Gold. Gold broke resistance at $1210/ounce, commencing a bear market rally. Expect resistance at $1250. Reversal below support at $1180 is unlikely at present but would warn of a decline to the 2015 low at $1050/ounce.

Spot Gold in USD

The Aussie Dollar is in a primary down-trend with descending Trend Index peaks below zero warning of strong selling pressure.

Australian Dollar

The combination of a gold bear rally and a weak Aussie Dollar prompted a rally among Australian gold miners. The All Ordinaries Gold Index (XGD) broke resistance at 4900 and is testing 5100. Ascending troughs on the Trend Index indicate buying pressure and a test of 5400 is likely.

All Ordinaries Gold Index

Dollar strength keeps gold bulls in check

Gold continues to find resistance at $1210/ounce. Trend Index peaks below zero warn of LT selling pressure but rising troughs suggest a secondary rally. Respect of resistance and the declining trendline would warn of another decline, offering a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

The Dollar Index found support at 94. Follow-through above 96.50 would confirm another advance. A strengthening Dollar is likely to weaken demand for Gold.

Dollar Index

The Aussie Dollar broke support at 71 US cents, prompting a weak rally among Australian gold miners. The All Ordinaries Gold Index (XGD) is ranging between 4550 and 4900. Gold is more volatile than the currency and likely to determine long-term direction. A Trend Index peak below zero would signal continuation of the down-trend.

All Ordinaries Gold Index

East to West: Trade tariffs spark rally

Commodities rallied and Asian stocks found support after a three-month sell-off.

DJ-UBS Commodity Index

From Reuters (September 19):

Copper jumped to its highest in three weeks on Wednesday, boosted by a weaker dollar after a new round of U.S.-China trade tariffs were not as high as previously expected.

China will levy tariffs on about $60 billion worth of U.S. goods in retaliation for U.S. tariffs on $200 billion worth of Chinese goods. Washington’s new duties, however, were set at 10 percent for now, rising to 25 percent by the end of the year, rather than starting immediately at 25 percent…….

“In some ways the bad news had been priced into the markets and, if anything, the news on trade had been slightly less severe than we had thought it would be,” said Capital Economic analyst Caroline Bain.

“It’s still too early to talk about this as sustainable … it just seems to be a bit of a relief rally after all of the bad news.”

The Shanghai Composite Index rallied off primary support at 2650, a slight bullish divergence on the Trend Index signaling short-term buying pressure. Penetration of the descending trendline would suggest that a bottom is forming.

Shanghai Composite Index

Japan’s Nikkei 225 is testing its January high at 24,000.

Nikkei 225 Index

India’s Nifty is testing support at 11,000. Long tails indicate buying pressure. Respect of support would signal another advance.

Nifty Index

Europe

Dow Jones Euro Stoxx 50 rallied off primary support at 3300 but is yet to break the down-trend.

DJ Euro Stoxx 600 Index

The Footsie also rallied, finding support at 7250, but a declining Trend Index warns of continued selling pressure.

FTSE 100 Index

North America

The S&P 500 rallied off the new support level at 2875 and is likely to test its long-term target of 3000.

S&P 500

The Nasdaq 100, however, continues to test support at 7700. Breach would warn of a correction to test 7000.

Nasdaq 100

Canada’s TSX 60 found support at 950 but declining peaks on the Trend Index continue to warn of selling pressure.

TSX 60 Index

Markets are dominated by one concern, a US-China trade war, and volatility is likely to remain high until a resolution is found.

Aussie gold stocks rally

Gold continues to find resistance at $1210/ounce. Trend Index peaks below zero warn of selling pressure. Respect of resistance would indicate another decline and a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

Currencies

The PBOC is supporting the Yuan at 14.5 US cents.

CNY/USD

Support for the Yuan is driving down the Dollar. Dollar Index breach of support at 95 warns of a correction to test 91. Bearish divergence on the Trend Index warns of selling pressure. A falling Dollar is likely to boost demand for gold.

Dollar Index

The Australian Dollar benefited from the weaker greenback, rallying to test resistance at 73/73.5 US cents. Trend Index peaks below zero continue to warn of long-term selling pressure. Respect of resistance is likely and would signal a test of the 2015/2016 low at 70 US cents.

Australian Dollar/USD

Gold Stocks

Australian gold stocks rallied despite the strengthening Aussie Dollar. The All Ordinaries Gold Index (XGD) is likely to encounter stiff resistance between 4900 and 5100.  A Trend Index peak below zero would warn of further selling pressure and continuation of the down-trend.

All Ordinaries Gold Index

Silver warns of further Gold weakness

Precious metals tend to trend or consolidate together, driven by similar investor motives. Spot silver is testing primary support at $14 per ounce, while a Trend Index peak at zero warns of selling pressure. Breach of support would signal a primary down-trend.

Spot Gold in USD

Gold is still testing support at $1200/ounce but Trend Index peaks below zero warn of selling pressure. Respect of the descending trendline indicates another decline with a long-term target of the 2015 low at $1050/ounce, similar to silver.

Spot Gold in USD

Currencies

The Yuan continues to test support at 14.5 US cents.

CNY/USD

The Dollar Index continues to test support at 95, despite the weak Yuan. Bearish divergence on the Trend Index warns of selling pressure but long tails indicate support. Breach of support at 95 is uncertain but would signal a correction to test 91 — boosting demand for gold.

Dollar Index

The Australian Dollar continues a strong down-trend, with Trend Index peaks below zero warning of selling pressure. Expect a test of the 2015/2016 low at 70 US cents.

Australian Dollar/USD

Gold Stocks

The falling Aussie Dollar has partially cushioned local gold stocks from weaker gold prices but gold is more volatile than the Dollar. The All Ordinaries Gold Index (XGD) is expected to break support at 4550, offering a long-term target of 4000/4100.

All Ordinaries Gold Index

East to West: Bonds & tariffs hurt developing markets and crude prices

10-Year Treasury yields are consolidating in a triangle below long-term resistance at 3.00 percent. Breakout above 3.00 would signal a primary advance, ending the decades-long bull market in bonds. This would have a heavy impact on developing economies, including China, with a stronger Dollar forcing higher interest rates.

10-year Treasury Yields

A Trend Index trough above zero would signal buying pressure and a likely upward breakout.

Crude oil prices, as a consequence of higher interest rates and the threat of trade tariffs, are starting to form a top. Bearish divergence on the Trend Index warns of selling pressure. Breach of support at $65/barrel would signal reversal to a primary down-trend.

Nymex Light Crude

Commodity prices are leading, breach of support at 85.50 already having signaled a primary down-trend.

DJ-UBS Commodity Index

China’s Shanghai Composite Index is in a primary down-trend. Trend Index peaks below zero warn of selling pressure. Breach of support at 2700 is likely. The long-term target is the 2014 low at 2000.

Shanghai Composite Index

Germany’s DAX is headed for a test of primary support at 11,800. Descending peaks on the Trend Index warn of secondary selling pressure. Breach of primary support is uncertain but would offer a target of 10,500.

DAX

The Footsie also shows secondary selling pressure on the Trend Index, warning of a test of primary support at 6900/7000.

FTSE 100

In stark contrast, North American tech stocks have made huge gains in the last four months, but are now retracing to test support. Breach of the rising trendline and support at 7400 would warn of a correction; a test of the long-term rising trendline at 7000 the likely target.

Nasdaq 100

The S&P 500 has also made new highs. Penetration of the rising trendline would warn of a correction to the LT trendline at 2800.

S&P 500

North America leads the global recovery, developing markets including China are falling, while Europe is sandwiched in the middle, with potential loss of trade from East and West if a trade war erupts.

From the AFR today:

President Donald Trump said he’s ready to impose tariffs on an additional $US267 billion in Chinese goods on short notice, on top of a proposed $US200 billion that his administration is putting the final touches on.

“….I will say this: the world trading system is broken.” Trump is “dead serious” in his determination to push China to reform its trade policies, [White House economic adviser Larry Kudlow] added.

Can’t say he didn’t warn us.

Gold stocks face selling pressure despite plunging Aussie Dollar

The Yuan continues to test support at 14.5 US cents.

CNY/USD

The Dollar Index recovered above support at 95. Respect of support would confirm another advance, with a long-term target of 103, but bearish divergence on the Trend Index still warns of selling pressure.

Dollar Index

Gold is testing resistance at $1200/ounce but Trend Index peaks below zero warn of strong selling pressure. Respect of the descending trendline would indicate another decline with a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

The Australian Dollar is plunging, having broken short-term support at 72 US cents. Trend Index peaks below zero indicate strong selling pressure. Expect a test of the 2015/2016 low at 70 US cents.

Australian Dollar/USD

The falling Aussie Dollar may cushion local gold stocks, to some extent, from weaker gold prices but the All Ordinaries Gold Index (XGD) continues its downward path. Tall shadows on the last three candles flag selling pressure. Breach of short-term support at 4550 is likely and would offer a long-term target of 4000/4100.

All Ordinaries Gold Index